USD/JPY Tracking Recent Ranges Ahead OF Key Event Risks

Yen was largely range bound post the Asia close. We did see a brief dip towards 139.00 but this was supported, with the pair rebounding towards 139.80 late in NY trade, as broader USD sentiment recovered. We closed back near 139.60, which is where we currently track. The yen lost a modest 0.14% for Monday's session.

• To some extent markets look to be biding their time ahead of key event risks, with US CPI later today in the US, followed by tomorrow's FOMC.
• US yields finished a touch lower, more so at the front end. 10yr yields recovered from lows around 3.71%, spiking to 3.79% (before closing around 3.735%), which helped lift USD indices higher. Equity sentiment was mostly positive, with US equities pushing through recent highs, although yen crosses were mixed. AUD/JPY tracked higher, but other pairs saw mostly sideways price action.
• Expectations remain low for any significant shifts at this Friday's BoJ meeting. Focus may rest on the BoJ's inflation outlook and whether the central bank tweaks its language on the matter, see this piece from the MNI policy team.
• In the vol space, 1 week USD/JPY vol sits sub recent highs, last around 10.65%, while 1 week risk reversals have dipped but remain well above previous YTD lows (last -1.32).
• On the data front today is the BSI Q2 survey for manufacturing and all industries.